Apollo Hospitals Stock: Citi Ups Target Price, Sees Valuations As Attractive
Global brokerage firm Citi has reiterated Apollo Hospitals Enterprise Ltd. as a high-conviction buy, arguing that the recent stock correction has turned valuations attractive. The brokerage notes that Apollo’s share price has already more than factored in near-term losses from new hospitals and the temporary disruption in patient inflows from Bangladesh.
Target Price Upgrade and Earnings Visibility
The brokerage projects consolidated Ebitda CAGR of 23% over FY25–28E and maintains its ‘buy’ call, raising the target price to Rs 9,600 from Rs 9,330 earlier, indicating a 35.5% potential upside. Citi acknowledges that losses of around Rs 200 crore over FY26–27 from newly commissioned hospitals could keep hospital Ebitda margins broadly flattish at 24% in the near term. However, as these facilities ramp up, the brokerage expects over 100 bps margin expansion in FY28.
HealthCo Segment: A Value Creator
It also highlights that Apollo’s HealthCo segment is shifting from being a drag to becoming a value creator as offline pharmacies scale up, losses in Apollo 24×7 narrow, and the Keimed merger and eventual listing unlock a large high-growth consumer platform.
Core Hospital Business: Strong Earnings Visibility
On the core hospital business, Citi sees strong earnings visibility. Apollo is delivering mid-teens revenue growth, backed by expansion in Tier-1 cities, steady occupancies, and rising average revenue per occupied beds driven by a richer case mix. The disruption in Bangladesh patient inflow is already reflected in the base, and management expects the second half of the year to be stronger than the first half.
Risk-Reward Attractive
Citi says the HealthCo and pharmacy businesses are moving from drag to value creation. Losses have narrowed with offline and online pharmacy operations turning Ebitda-positive in FY25, and Apollo 24×7 expected to break even by end-FY26.
Investment Strategy
Calling the stock’s risk-reward attractive, Citi notes that Apollo has underperformed peers over the last one to two years and now trades at a discount to key listed players as well as below its own historical valuation band. Concerns around Bangladesh patient disruption and losses from new hospitals have contributed to this underperformance, but Citi believes these are already priced in. For investors looking to invest in the Indian stock market, Apollo Hospitals could be a viable option, given its strong earnings visibility and attractive valuations.
Conclusion
In conclusion, Apollo Hospitals Enterprise Ltd. has received a target price upgrade from Citi, citing attractive valuations and strong earnings visibility. The brokerage expects the company’s HealthCo segment to shift from being a drag to becoming a value creator, driven by the scaling up of offline pharmacies, narrowing losses in Apollo 24×7, and the Keimed merger. With a strong core hospital business and attractive valuations, Apollo Hospitals could be a viable option for investors looking to invest in the healthcare sector.